Guyana is a country located on South America’s North Atlantic coast, bordering Venezuela, Suriname, and Brazil. In 2015, a Partnership for National Unity+Alliance for Change (APNU+AFC) coalition won the presidency and a one-seat majority in the National Assembly, ending 23 years of rule by the People’s Progressive Party/Civic (PPP/C). Preceding the election, the uncertainty slowed down investment, with the implementation of many governmental projects either put on hold or curtailed until after the elections. APNU+AFC reorganized several ministries and, after having been out of power for over 20 years, faced challenges in making the improvements promised during the 2015 campaign. Despite the difficulties, Guyana remains one of the better performing economies in the region, in spite of a slower growth in 2016 of2.6 percent. The World Bank expects growth will be closer to 4 percent in 2017 and mid-term prospects are very positive with the production of petroleum expected to begin in 2020.
The Government of Guyana (GoG) publicly encourages foreign direct investment (FDI). Guyana offers potential investors – foreign and domestic alike – a broad spectrum of investment choices, ranging from more traditional industries, such as mining, sugar, rice, and timber, to non-traditional export sectors, such as aquaculture, agro-processing, fresh fruits and vegetables, light manufacturing, and value-added forestry products, and even to services exports (such as tourism, call centers, and information technology enabled services). Many products receive duty-free or reduced-duty treatment in destination markets. The GoG continues to encourage foreign investment but with limited success outside of the extractive industries sectors.
Perceptions of corruption persist in Guyana. Transparency International (TI) in its 2016 report on the subject scored Guyana 108 out of 176 ranked economies – an improvement from 119th place in 2015. Corruption, as well as GoG inaction, inadequate infrastructure, and crime remain barriers to attracting foreign investment.
Guyana continues to benefit from official development assistance from multiple donors with projects focused on health care, education, economic development, climate change adaptation, disaster mitigation, and citizen security. In 2016, the United Kingdom announced significant funding for infrastructure development in Guyana to be administered over the next five years through the Caribbean Development Bank.
Guyana’s long-term record in attracting private-sector investment, however, remains poor. According to the Bank of Guyana’s Mid-Year Report for 2016, Guyana saw lower foreign direct investment inflows, which fell from USD 78.3 million in the first half of 2015 to USD 29.2 million in the first half of 2016.
In March 2015, ExxonMobil began exploratory drilling off Guyana’s coast, initially investing roughly USD 300 million into the project. ExxonMobil has since reported significant findings of off-shore petroleum that, as of April 2017, estimated at around 1.75 billion barrels of oil-equivalent, with exploration continuing for the foreseeable future. This venture would generate billions in revenue for the country and would potentially transform the social, political, and economic landscape.
The Millennium Challenge Corporation, a U.S. Government entity charged with delivering development grants to countries that demonstrate a commitment to reform, produced scorecards for countries with a per capita gross national income (GNI) of USD 4,125 or less. Guyana was designated a “Threshold Country” in 2010. A list of countries/economies with MCC scorecards and links to those scorecards is available here: http://www.mcc.gov/pages/selection/scorecards. Details on each of the MCC’s indicators and a guide to reading the scorecards are available here: http://www.mcc.gov/pages/docs/doc/report-guide-to-the-indicators-and-the-selection-process-fy-2015.
Guyana successfully exited the FATF International Cooperation Review Group in October 2016, having addressed all the deficiencies identified in the Core and Key Recommendations. Guyana has been removed from FATF’s watch list. During the first year of the APNU+AFC government, the coalition passed three sets of amendments to the Anti-Money Laundering and Countering Terrorist Financing (AML/CTF) legislation. The amendments were directly based on recommendations from the Americas Regional Review Group (ARRG). The government has also focused on fighting crime, particularly financial crime. According to the Minister of Finance, success in tackling crime slowed down the economy, as a large number of illicit funds were removed from Guyana’s very cash-based economy.
Political gridlock and infighting historically hampered the country’s development efforts on several fronts. For example, the Amaila Falls Hydropower Project (AFHP), which would have been the largest capital project in the country’s history, fell apart after a decade of planning when the U.S. developer and equity partner withdrew from the multinational development team in August 2013. The company expressed concerns over political risk following objections to the venture by the then-opposition party APNU. The Norwegian government subsequently conducted a new feasibility study on the AFHP and submitted the report to the government. The GoG has indicated publicly that the report recommended that a more suitable site should be sought for the project. However, a number of other hydro-electric and renewable energy projects are expected to be under consideration in line with the GoG’s efforts to pursue a green economy under the Green Development Strategy (GDS) announced in 2016 and to help lower Guyana’s electricity costs and reduce dependency on imports of hydrocarbons. If successful, any potential projects will go a long way in promoting greater investment because high electricity costs are one of the largest impediments to significant value-added investment.